Asset-Backed Securities: Types

Securitization is a structured process whereby interests in financial assets, such as mortgages, loans, or other receivables, are packaged, underwritten, and sold in the form of asset-backed securities. We examine asset-backed securities, in terms of their construction and role of particular US agencies in this industry. The underlying assets can differ across constructs with some having underlying assets of higher credit quality than others. This can lead to some constructs suffering greater delinquency than others and we see how this is reflected in their basis points.